Chancellor George Osborne has delivered his 2013 Budget statement, and the good news for motorists is that the 1.89p per litre (ppl) fuel duty rise has been cancelled.
The increase was originally planned to happen on 1 September but has now been scrapped altogether. Fuel duty rates will instead remain at 57.95ppl until September 2014, in a decision that's likely to cost the Treasury around £1bn in lost revenue over the next 12 months.
The news comes as a welcome relief to motorists, who have seen petrol prices soar to as much as 138.32ppl in February. Mr Osborne said: “Together with the British people we are, slowly but surely, fixing our country’s economic problems.”
By scrapping the increase in fuel tax, petrol will be 13ppl cheaper than if the duty had not been frozen over the last two years. According to the Chancellor, the savings are substantial: “For a Vauxhall Astra or a Ford Focus that’s £7.00 less every time you fill up”.
Mr Osborne said: “We inherited a fuel duty escalator that would have seen above inflation increases in every year of this Parliament. We abolished the escalator and now we’ve now frozen fuel duty for two years. This has not been easy. The Government has foregone £6billion in revenues to date.”
Edmund King, president of the AA, welcomed the news, but with “relief, rather than joy”.
Professor Stephen Glaister, director of the RAC Foundation, said: “Through this move the Chancellor will lose about £1 billion a year in duty and VAT income, but tens of thousands of people will be saved from being forced to give up their cars against a backdrop of generally rising running costs.
“It is welcome that George Osborne has listened to the concerns of the nation’s 35 million motorists about the inflammatory issue of near-record pump prices.”